The Internal Revenue Service will allow victims of Bernard L. Madoff’s investment fraud to claim a lucrative tax deduction related to the bulk of their losses, the I.R.S. commissioner testified Tuesday morning before the Senate Finance Committee .

The commissioner, Douglas H. Shulman, told lawmakers that the agency was offering guidelines for taxpayers who are victims of losses from Ponzi schemes like Mr. Madoff’s.

The plan represents the first time that the I.R.S. has come forward with a policy regarding how it will treat Mr. Madoff’s victims. The subject has been a point of debate and anxiety for the victims and their accountants, given the uncertainty and lack of clarity in the tax code over how the matter should be dealt with.

The plan, which applies to victims of all Ponzi schemes, is likely to provide major relief to the victims of Mr. Madoff, who pleaded guilty last week to orchestrating what prosecutors say is the largest Ponzi scheme ever — one that could reach $65 billion and cover 13,000 investors.

The plan would ease existing rules governing what are known as theft-loss deductions, which are losses claimed by investors who are cheated by their investment advisers and others in Ponzi schemes and other frauds.

Under the plan, which has been reviewed by the congressional offices, the I.R.S. will allow investors who are not suing Mr. Madoff to claim a theft-loss deduction equal to 95 percent of their investments, minus any withdrawals, reinvested gains and payouts from Securities Investor Protection Corporation, the government-chartered fund set up to help protect investors of failed brokerage firms.

Investors who are suing Mr. Madoff, and who thus may have some prospect of recovery, can claim a deduction equal to 75 percent of their investments.

The White House said Hamilton, from Indiana, will serve on the 7th U.S. Circuit Court of Appeals covering his state, Illinois and Wisconsin.

Hamilton served as counsel to Democratic Sen. Evan Bayh when he was governor. He is a federal judge in Indianapolis.

A senior administration official, who would only speak on condition of anonymity to discuss the nomination, said Indiana's Republican senator, Richard Lugar, told the White House he supports Hamilton.

The official said Obama is looking for nominees who will overcome partisan Senate acrimony of the past. Some nominees have bitterly divided the Senate, no matter which party was in the majority or controlled the White House.

The administration also is looking at candidates for any future Supreme Court vacancy, but the official described that search simply an effort to be prepared.

There are 11 U.S. Circuit Courts of Appeals that cover specific regions, and the circuit for the District of Columbia. There currently are 15 vacancies, including the seat to be filled by Hamilton.

Since most cases do not reach the U.S. Supreme Court, federal appellate decisions often are the final word on legal matters that affect millions of Americans — from civil liberties and civil rights, to abortion and challenges to government actions.

Hawaii Superferry, which operates an Oahu-Maui catamaran that can accommodate 836 passengers and about 200 vehicles, was forced into the move Monday.

The high court rejected a state law that allowed the company to operate while an environmental study is being conducted.

Superferry said in a statement that it was "hugely disappointed" in the decision.

In order to proceed prudently, the company said it had "decided to cease operations for the present."

Superferry says it will make one additional Honolulu-Maui round trip Thursday to get vehicles back to their home islands.

In a conversation focused heavily on the economy, Obama met in the Oval Office with Brazilian President Luiz Inacio Lula da Silva. It was the latest in a series of talks the president has had with his counterparts around the world before a pair of international meetings where the economic crisis will dominate.

Both leaders will attend the Group of 20 countries summit in London on April 2, and the Summit of the Americas in Trinidad in mid-April.

Obama said the notion that the U.S. and Europe are already taking sides, with America pushing for more stimulus spending and European nations favoring tighter regulation of the financial industry, is a "phony debate."

A top economic aide to President Obama defended the administration’s multi-front strategy to tackle a number of economic issues at once, calling it “the right medicine,” while a House GOP leader criticized those plans as a “lack of focus.”

“It is an economic war,” said Christina Romer, chairwoman of the Council of Economic Advisers. “We have inherited a crisis like none since we had the Great Depression. So absolutely, it is something we need to deal with. I think we are.”

Speaking on NBC’s “Meet the Press,” Romer acknowledged, “We haven’t won yet. We have staged a wonderful battle. So we have put in place just a host of programs: the stimulus package, the financial rescue plan, the housing plan. We think it’s the right medicine and we think it will work.”

Romer cited a “focus on fundamentals” by the administration. “The other thing I think is so important, the president has actually said in terms of fundamentals, we need to make changes,” she said. “That’s why he’s focusing on energy, education, getting the budget deficit under control...”

However, House Republican Whip Eric Cantor , R-Va., also appearing on the program, criticized the administration for not targeting the fiscal crisis first.

“I want to believe that we’re going to get out of this mess. I think all Americans do,” he said. “But I’ll tell you, on Friday I met with 25 small-business people in my district, and times our tough. I mean, we know that 650,000 people lost their job last month. If my math is correct, that works out to be about 15 jobs a minute that people are losing. ...

“I think we’re seeing out of the Obama administration is a lack of focus on how to get things going again. If we’re going to get things going again, how can we have a budget that doubles the debt on our children?”

The White House reportedly will announce Monday that it will provide an estimated $10 billion to thaw out credit markets specifically for small businesses.

In January, Baxter International sent a warning to customers about issues with its Colleague infusion pumps that could cause them to stop pumping and overheat. On Wednesday the company said the FDA classified the announcement as a Class I recall, its most severe warning. The classification applies to problems that can cause "serious adverse health consequences or death."

Public Citizen's Dr. Sidney Wolfe blasted the agency in a letter Thursday for not moving faster.

"Why did it take the FDA 47 days, almost 7 weeks ... to decide that this problem was serious enough to merit being classified as a Class I recall?" Wolfe wrote in a letter to acting FDA Commissioner Dr. Frank Torti.

FDA's classification has limited real-world impact. Baxter's products are not actually being called off the market, but the serious warning is necessary because malfunctions with the devices can be fatal.

Maureen Mahoney says in an emergency motion filed Wednesday in Denver federal court that Nacchio isn't dangerous and won't flee.

Mahoney says she's moving swiftly to seek a Supreme Court review of his case and that the appeal will raise a significant question for the high court to review.

Nacchio was convicted in 2007 on 19 counts of insider trading and sentenced to six years in prison. A three-judge panel of the 10th U.S. Circuit Court of Appeals reversed the conviction, but the full appeals court later reinstated it.

A judge has since ordered him to report to prison by noon March 23.